Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Need Clarification on the below questions to make sure I am right on track. Thanks. 1. When interested in the rate of return performance of

Need Clarification on the below questions to make sure I am right on track. Thanks.

1.When interested in the rate of return performance of an investment over time it is best to use:

A.The arithmetic mean.

B.The geometric mean.

C.Either the arithmetic mean or the geometric mean.

D.Neither the arithmetic mean nor the geometric mean.

I think its A.

2.Which of the following is not an assumption of Modern Portfolio Theory?

A.Investors are risk averse.

B.Investors are rational decision makers.

C.Risk comes from not knowing what you are doing.

D.Investors' preferences are based on a portfolio's expected return and risk.

3.An investor throwing darts at the NYSE stock listings in the newspaper to select stocks to invest in is an example of:

A.Unique risk.

B.Efficient portfolio

C.Portfolio management

D.Random diversification.

I think its A.

4.Which of the following would not be an example of random diversification?

A.Throwing darts at the stock listings to select a portfolio of stocks.

B.Purchasing whichever stocks were recommended by the expert on a financial program.

C.Stocks selected from asking all of your friends their favorite stock and then putting together a portfolio from them.

D.A portfolio recommended by your financial planner, which includes a variety of different investments and stocks from various industries, countries, and company sizes.

Is it D.

5.Which of the following would be considered risk averse?

A.Sky diving

B.Playing the lottery

C.Gambling in Las Vegas

D.Purchasing health insurance

Is it A.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Options Futures and Other Derivatives

Authors: John C. Hull

10th edition

013447208X, 978-0134472089

More Books

Students also viewed these Finance questions

Question

What are some of the features of state securities laws? LO4

Answered: 1 week ago

Question

=+b) Cut the runs to 8 by testing only in hot water.

Answered: 1 week ago